I imagine that some readers were not too happy with my assessment of Plug Power (NASDAQ:PLUG) stock in December. Plug Power had just climbed over 400% in six months and I was taking the punch bowl away. I probably sounded a bit like the Grinch by stealing investors’ holiday joy.
Well, retail investors said, challenge accepted. In a little over a month from the time that article dropped, PLUG stock surged 131%. And that was before the mania over the meme stocks. This was simply bullish sentiment sprinkled in with a little (or a lot) of FOMO.
Can I say I told you so? PLUG stock took a big drop in recent weeks and now is trading slightly below where it was when I last wrote about the company in December.
But I won’t say it, because I’m not entirely sure my narrative from then holds up as well now.
PLUG Stock Ran Out of Juice
In December, I was arguing simply that the hope for a hydrogen future was being overstated. I believed then and I believe now that hydrogen will play a key role in our renewable energy future. But as investors, we should be careful not to pay tomorrow’s price today.
For one thing it leaves little room for growth. And when the only way is down, you get the situation with PLUG stock. That seems to be the driving force behind Morgan Stanley analyst Stephen Byrd’s candid assessment of PLUG stock.
In short, Byrd’s not a big fan of the stock’s valuation. But Byrd still set a price target of $35 that now would represent a gain of over 20% from the stock’s current level.
So maybe I will give just a little shrug of the shoulders. I read Byrd’s comments. This was far from a hatchet piece. It was simply a reflection of a future that is not as close as some think.
What are you going to do?
It bears noting that PLUG stock was dropping long before Byrd’s analysis. However, Byrd may have confirmed what others suspected. At that point it was like yelling fire in a crowded theater.
This Didn’t Help
Unfortunately, Plug Power had a bit of an awkward moment. Specifically, the company has to restate three years of financials. This is due to the company accounting warrants it issued to customers as incentives. The company says this issue does not affect a cash item so there will be no effect on Plug Power’s balance sheet.
I have no reason to not take the company at its word. It would be the height of foolishness for the company to be anything less than truthful about the situation. As Chris Tyler wrote about the situation for InvestorPlace:
… it doesn’t appear PLUG is to be following the path of more mischievous deceit or facing larger question marks which have plagued peers Nikola (NASDAQ:NKLA), Kandi Technologies (NASDAQ:KNDI) and Hyliion Holdings (NYSE:HYLN).
Perception is Today’s Reality
I’ve said on many occasions that perception is reality. PLUG stock is down 8.5% since the announcement that it would have to restate its financials. But there’s still a lot to like about PLUG stock. Institutional ownership is up. Short interest is going down. And the stock is at a price where it would appear the bulls have a chance to get the upper hand.
So, I go back to where this article started and ask what are you going to do about it? I might wait until after the company delivers its earnings report in May before deciding, but that’s me.
If you believe that PLUG stock is a good buy use this as an opportunity to add to your position. You may have to wait for the stock to get back to its January highs. You may have to wait quite a while.
But the future belongs to the bold. And if that future includes hydrogen, it may very well belong to Plug Power.
So, you tell me. Challenge accepted?
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.